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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (153058)	10/1/2008 1:16:03 PM
From: GraceZ	Respond to of 306849

you are really talking about cash dividends Yes, I meant cash dividends, paid from earnings. Thanks for clarifying this. This introduces money into the "game" that doesn't have to come from another player. when a stock goes ex-dividend, ceteris paribus its ex-dividend price is equal to the pre-ex-dividend price plus the distributed dividend This change in price due to a stock going ex-dividend doesn't factor into how much total cash has been put into the "game" anymore than a change in market cap due to a change in the last sale. In the game of buying and selling stock, we're only talking about cash that equity buyers put in and what holders and sellers get to take out. Obviously, paying a cash dividend changes the value of the underlying equity but I'm confining my comments to actual realized gains and losses on the part of the players. I agree that US equities holders will most likely demand that a larger portion of retained earnings be paid out in cash dividends, instead of retained for growth with the idea that the value of the enterprise would grow and by doing so allow the stock price rise with it. Clearly, in the last four decades, equities buyers erred on the side of capital gains expectations, those expectations being far too high, as they did with RE. The rapidity by which new companies were able to grow as we moved to an information based economy lead them to make this error which they are now correcting. I agree that in the US we will most likely see contraction in the share of corporate earnings to GDP with a Democratic take over, but I doubt we'll see a long term contraction in corporate earnings to GDP in all the developing countries, even if we see a rise in protectionism and blocks to global trade here in the US. The good news is that US equities investors can still put their savings to work in some other country.